staying true to its open-door policy for foreign talent, the singapore government will raise the tax deduction limits for expenses incurred by employers in "hiring top talent" from abroad.

This essentially makes it cheaper for companies to relocate foreign expatriates to singapore, helping to lower a perceived cost barrier to recruiting top talent from outside the country.

"The decision to relocate is often easier if the individuals are able to bring their families with them," Deputy Prime Minister and Finance Minister Lee Hsien Loong explained during his budget speech.

But relocating an entire family to singapore often requires extra cost, such as the renting of larger

homes and the cost of children attending international schools.

This is why the Government introduced the Double Tax Deduction (DTD) for the Overseas Talent Recruitment scheme in 1998, which allows employers to claim tax breaks for the approved relocation and recruitment of their foreign talent.

The change, effected two days ago, raises the tax deduction limit that employers can claim for P1 employment pass holders from $15,000 to $25,000; and from $5,000 to $15,000 for P2 employment pass holders.

A P1 pass is issued for a foreign employee whose monthly salary exceeds $7,000 while a P2 pass is given for a monthly salary range of between $3,500 and $7,000.

In addition, the total deduction an employer can claim for qualifying expenses has been bumped up to $275,000 from $150,000.

Human resource consultants contacted yesterday welcomed the move.

"Recruitment of foreigners is usually more complicated since there are procedures like immigration and application of employment passes," said Annie Yap, managing director of GMP Recruitment.

Agreeing, David Ang, executive director of the singapore Human Resource Institute, said: "If the employer has to pay a premium for the foreign talent, a further tax deduction will help to compensate."

Noting that foreigners add value to the economy, ManpowerCorp International's managing partner, David Leong, said : "London and New York are good examples of vibrant cities with a large number of migrants and these talents strengthened many of their economic, social and artistic pillars."